I've made some modifications to ClusterBot - I removed the round robot chassis and just used a square piece from a Meccano set. I've also added Ultrasonic sensor functionality. I threw a piezo speaker and an LED on him to make him a little more entertaining for the kids. My 3 year old loves him. When he doesn't detect an obstacle within the parameters I set, he runs straight and his LED stays on. When he detect an object, he rotates left, the LED flashes, and the piezo speaker chirps in time with the LED.
HC-SR04 Ultrasonic sensor - object avoiding Arduino robot. - ClusterBot